Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 9, Problem 6PA
(a)
To determine
The rate of growth of total income.
(b)
To determine
The level of income per worker.
(c)
To determine
The real rental price of capital.
(d)
To determine
The real wage.
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The amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force.Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: they have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. What would you predict for the following variables?a. The rate of growth of total income.b. The level of income per worker.c. The real rental price of capital.
The amount of education the typical person receives varies substantially among countries. Suppose you were
to compare a country with a highly educated labor force and a country with a less educated labor force.
Assume that education affects only the level of the efficiency of labor. Also assume that the countries are
otherwise the same: they have the same saving rate, the same depreciation rate, the same population growth
rate, and the same rate of technological progress. Both countries are described by the Solow model and are in
their steady states. What would you predict for the following variables?
a. The rate of growth of total income.
b. The level of income per worker.
c. The real rental price of capital.
d. The real wage.
According to the Solow–Swan model, if the saving rate rises, then:
a. steady state per capita income falls
b. per capita income falls
c. steady state per capita income rises
d. steady state per capita income is unaffected
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